A Lebanon County-based auction firm is working to establish itself as an East Coast player particularly in the high-volume property liquidation market of South Florida by leveraging Internet marketing capabilities and a partnership in the region.
Fortna Auctioneers & Marketing Group last year reached an agreement with Atlantic Properties International Inc. to help propel its work in a part of the Sunshine State that is attracting many foreign buyers, owner Michael Fortna said.
Fortna recently shared with the Business Journal what he’s learned so far about working in Florida
and how close to the midstate this robust interest in real estate from out-of-the-country purchasers could get.
Q: Please tell me a little bit about how you got into the real estate auction business and how it’s grown over the years.
A: I started in the auction business in 1978. We did on-premise sales, that sort of thing. And then around 1979 or so, (we) actually bought this building right next door here, 18 E. Main St. (in Annville Township), and opened up an auction gallery. And there we conducted weekly auctions, and then we got into antique auctions and so forth.
I grew up on a dairy farm and we used to go to a lot of auctions. So it went from there. I thought about being a cattle auctioneer and then realized it was difficult to get into that, so I got into antiques and households and real estate auctions.
Then I got involved with the auto auction industry about 20 years ago, and now aggressively work with one of the largest auto auctions in the industry, Manheim auctions.
And the whole time, (I was) doing real estate auctions, becoming more aggressive (with the business line) and realizing that that was really my true love. And now, as far as marketing, it’s not just newspaper anymore. It’s now on the Internet, doing our email blasts, supplying and buying email lists.
It’s just amazing to me how much the industry has changed as far as people contacting you to do an auction. Used to be buddy system; everybody knew everybody. Now people go to the computer.
We spend a lot of money on our website because we want it to become very search-optimization friendly. And again, I’m an old country boy. I’m 52 years old. This is very difficult for me learning it, but it’s a very powerful tool.
How and why did you decide to enter the Florida market and what have you learned so far there?
Around this (midstate) area, you hit November (and) because of the holiday, people are thinking turkey. December, they are thinking Christmas. January, they are shoveling snow and February they are shoveling snow. So for four months in this area, it really slows up. So our intent was, let’s do something and think outside the box.
We have formed a relationship and a partnership with Atlantic Properties International. (It’s a) different type of a clientele … basically, it’s Miami, Fort Lauderdale, where we’re concentrating now. It’s been tough to break into that market, but we finally booked our first sale for July. It’s actually a strip mall.
What’s happening down there is the banks are only releasing a little bit because they don’t want to flood the market. But now what’s happening … they have what they are calling wholesalers, people who are going into the banks and saying, “Look, you don’t have to auction these properties separately. I’ll come in and buy your whole portfolio.”
They buy everything, and then those people now are the people who we go after to liquidate their properties.
I guess it’s a much bigger economy of scale down there because they have a bigger glut of properties to deal with?
Absolutely. And, you know, what’s funny about down there, too, is when we market a property down there, we use very little newspaper advertising locally because 80 percent of the buyers in Broward County, that (wider) area … they’re all coming from out of the country (and) out of the state, too. And they find it by engine search.
Do you think foreign buyers will be a growing factor outside those types of touristy areas?
I think the buyers that are buying from out of the country are investors, people who want to buy and hold onto these properties and then flip them in four or five years. I don’t think it’s a quick flip. I think they are buying them and holding onto them and renting them. Rents are high. It’s amazing that people can pay the rent, but they can’t buy a place.
One condo, I can give you an example, that we were dealing with sold for $129,000 or $130,000, and the mortgage payment on that’s going to be probably $600. (But) they’re getting $1,200 rent.
I think it has to be a resort type of area for people to come in from out of the country. If you’re asking me if that’s going to happen here in Lancaster (or) Lebanon county, I don’t think so. I think it’s going to stick to along more of the resort areas, maybe like the Carolinas. It might happen along the Delaware/Maryland shore areas, those kinds of places.
What’s attractive about those resort areas to foreign buyers?
High percentage of rentals, more traffic, and if they buy now, the baby boomers are coming in. People are wanting to retire, they are doing it constantly, they are moving to places where it’s less stress, the weather’s better, those kinds of things.
Why isn’t there already a big dog on the block, so to speak, down there in this business?
Well, there is … but they’re busy. The auction business down there isn’t as big as it is here. Pennsylvania has one of the largest groups of licensed auctioneers probably in the country. But in Florida, there aren’t a lot. There’s not a lot of that. So there’s room for competition, and that’s why we’re down there.